Non-GAAP revenue came in at $17.4 billion and non-GAAP EPS is $0.65. The non-GAAP numbers include deferred revenue from Windows 8 pre-orders, as well as Windows 8 upgrades. Windows 8 comes out next quarter.

The reason Microsoft missed expectations was a slow down in Windows sales. A new version of Windows is coming out next week, so customers were holding off on buying Windows.

We spoke with Bill Koefoed, who is head of investor relations at Microsoft. He was optimistic about the Windows 8 pre-orders, saying that if you compare Windows 8 pre-orders over this period to Windows 7 pre-orders from a comparable period, the Windows 8 pre-orders are up 40 percent. Considering how much everyone hated Vista, and thus wanted to upgrade to Windows 7, Koefoed thinks this is a great sign for Microsoft.

Other notes from our call:

We really saw PC market slow down, but... But pre-sales of Windows 8 compared with Windows 7 pre-sales from same period was 40% higher. September ended up ramping.

Enterprise: 20% booking growth for Servers and Tools.

Online: 29% improvement in performance. Improvement in revenue per search. Most gain attributable to increase in RPS. Weakness on display side. Search advertisers getting higher ROI on Bing than Google. (Yahoo manages its own UI, so number of searches, are more driven by them. So won't necessarily be similar.)

Gaming console market continues to be soft. We had Gears of War in September quarter last year. We have Halo 4, some Kinect games in December quarter. All things offset low console.

Here's a quick look at the performance of the company's various divisions: